Menyegarkan Kembali Perekonomian Indonesia

Koran SINDO,
Kamis, 17 September 2009
http://www.seputar-indonesia.com/edisicetak/content/view/270642/

Presiden Barack Obama beberapa hari lalu menyampaikan pidato untuk mendorong reformasi sistem kesehatan Amerika Serikat di depan anggota legislatif.

Dia mengingatkan rakyatnya untuk tidak terjebak pada detail kebijakan, tapi berpegang teguh dan bergerak berdasarkan pada prinsip keadilan sosial dan karakter bangsa. Bila seorang Presiden dari negara yang menepuk dada sebagai pengguna sistem kapitalis dan pasar bebas sudah menyatakan keberpihakan demikian nyata dan amat mirip dengan prinsip kemanusiaan yang adil dan beradab dari Pancasila, maka amatlah miris apabila Indonesia justru mengabaikannya Untunglah dalam visi dari presiden dan wakil presiden terpilih, Susilo Bambang Yudhoyono dan Boediono, tercantum dengan anggunnya tujuan menuju terwujudnya Indonesia yang sejahtera, demokratis dan berkeadilan.

Sering disebut bahwa kekuatan ekonomi Indonesia adalah biaya tenaga kerja yang murah.Namun apabila hanya faktor itu yang diandalkan maka istilah Emil dan Theodor Helfferich kakak beradik bangsa Jerman yang sempat tinggal bertahun-tahun di Indonesia semasa penjajahan Belanda dan sering dikutip versi bahasa Inggrisnya oleh Soekarno,“Eine nation von kuli und kuli unter den nationen”, akan menjadi sebuah kenyataan.

***

Dalam ilmu ekonomi dikenal empat faktor produksi, yaitu tenaga kerja, modal, tanah dan kewirausahaan. Tenaga kerja yang terdidik dan sehat akan lebih produktif dibandingkan yang tidak nikmati pendidikan formal dan sakitsakitan. Indonesia, dengan bantuan keputusan Mahkamah Konstitusi, telah bergerak menjadi negara yang memperhatikan dan menanamkan investasi pendidikan di warganya dengan alokasi 20 % dari anggaran negara untuk sektor tersebut.

Program Bantuan Operasional Sekolah (BOS) dan target pendidikan sembilan tahun adalah target penting yang perlu didukung dengan segenap daya upaya. Para singa ekonomi Asia (Asian economic tigers) seperti Singapura, Taiwan,Hong Kong dan Korea Selatan adalah negara yang tidak memiliki kekayaan sumber daya alam namun amat serius meningkatkan kekayaan sumber daya manusia.Sampai kapan kita akan terus tertinggal bila kekayaan alam tidak dapat ditransformasikan menjadi peningkatan kualitas sumber daya manusia secara menyeluruh dan tidak hanya penambahan rekening bank sekelompok orang.

Namun Indonesia masih suatu negara di mana warganya masih meninggal karena tidak mampu menanggung biaya kesehatan padahal penyakitnya dapat diobati. Tentu saja tidak mudah menyediakan pelayanan kesehatan yang berkualitas segenap pelosok negara kepulauan seperti kita. Faktor produksi modal dan tanah berkait amat erat dengan sistem perbankan. Masalah yang terjadi di sektor perbankan terjadi di dua sisi. Dari sisi dana masuk mereka takut kehilangan penabung apabila tingkat suku bunga diturunkan.

Tapi dari segi dana disalurkan tidak banyak pengusaha, apalagi usaha kecil dan koperasi,yang dapat menanggung tingkat bunga yang masih cukup tinggi.Padahal tingkat bunga SBI sudah diturunkan oleh Bank Indonesia. Untuk itu dibutuhkan langkah tegas dan strategis.Memang benar bila satu bank menurunkan suku bunga maka nasabah yang rasional akan memindahkan ke bank dengan suku bunga yang lebih tinggi setelah memperhitungkan biaya transaksi pemindahan tabungan.

Tapi apabila semua bank di Indonesia menurunkan suku bunganya maka tidak ada lagi pilihan bagi deposan selain menginvestasikan langsung ke sektor riil yang justru lebih baik lagi. Hal ini dapat dilakukan dengan menurunkan suku bunga yang dijamin oleh Lembaga Penjamin Simpanan (LPS) dan memublikasikan implikasinya.Tidak banyak nasabah yang memiliki akses untuk perbankan di luar negeri.Apalagi perusahaan yang notabene membutuhkan bank di Indonesia untuk transaksi dan operasi.

***

Hernando de Soto (2000) dalam Mystery of Capitalmenyatakan bahwa kapasitas produksi negara berkembang banyak terhambat karena lemahnya sistem administrasi pertanahan. Dengan kepemilikan tanah yang tidak tercatat secara resmi maka rakyat tidak dapat menjaminkan tanah yang mereka miliki untuk mendapatkan modal dan memulai usaha.

Padahal metode ini adalah jalan paling umum yang ditempuh di negara maju. Peraih Nobel Perdamaian, Muhammad Yunus, juga menekankan bahwa perbankan harusnya menyediakan pinjaman untuk yang miskin dan membutuhkan.Bukan yang sudah kaya raya. Sering kali hambatan yang dimiliki adalah agunan dan kemampuan administrasi. Grameen Bank yang dibangunnya telah membuktikan bahwa rakyat miskin justru memiliki tingkat kredit macet yang lebih rendah bila proses peminjaman dilakukan secara benar.

Kapasitas administrasi usaha kecil dalam sistem akuntansi dan pengisian formulir peminjaman bank secara benar menjadi bottle neck yang sebenarnya tidak sulit diatasi dengan sistematis. Poin terakhir adalah kewirausahaan. Pada sistem ekonomi dunia yang terglobalisasi maka proses produksi dapat dilakukan di mana saja. China menjadi pabrik dunia sementara India menjadi back officeyang mengurusi administrasi dan customer services.

Tapi yang menikmati profit adalah pemilik merek dan pemegang sahamnya. Selama Indonesia masih puas menjadi tukang jahit yang sekedar mengerjakan orderan maka tidak akan banyak peningkatan kesejahteraan yang terjadi. Ha Joon- Chang,ekonom asal Korea Selatan di Cambridge, menjabarkan betapa Korea Selatan perlahan lahan menaiki tangga value added chains dari tekstil, elektronik, dan mesinmesin berat serta microchip.

***

Studi kewirausahaan global 2003–2005 meliputi 83 negara dari Bank Dunia menempatkan Indonesia dalam katagori terendah munculnya usaha baru. Hal ini harus diubah dan hambatan dalam berusaha harus dipangkas jika kita perubahan yang nyata dan permanen. Padahal Indonesia memiliki keunggulan sebagai negara kelautan tropis dengan keanekaragaman hayati yang amat luas. Sudah saatnya berbagai produk buah dan obat serta sumber daya laut dunia disuplai oleh Indonesia, bukan oleh Amerika,Australia atau Thailand yang sinar mataharinya terbatas.

Itu semua bukan hal yang tidak mungkin dicapai dalam lima tahun mendatang dengan riset dan pemasaran yang intens. Seperti dikatakan Presiden Kennedy, “All this will not be finished in the first one hundred days; nor even perhaps in our lifetime on this planet.But let us begin.” Sudah saatnya Indonesia berhenti jadi kuli.(*)

Berly Martawardaya
Dosen FEUI dan Ekonom Senior INDEF

Experiencing presidential election abroad

http://www.thejakartapost.com/news/2009/07/15/experiencing-presidential-election-abroad.html

Berly Martawardaya , The Hague , The Netherlands | Wed, 07/15/2009 11:55 AM | Opinion

I was walking in the artistic surrounds of the diplomatic area in Jacob Catslaaan, where numerous embassies are located, after getting off from a short tram ride to The Hague train station when a middle-aged woman and a teenager approached us. The teenager asked in fluent Dutch whether we knew the direction to the Indonesian embassy.

At first, we thought they were one of the many Indonesian descendants in the Netherlands that had already gained local citizenship and wanted to apply for visa to visit their forefather's country. To our surprise, the teenager asked for directions to the Indonesian embassy as he wanted to vote. We immediately switched to talking in the Indonesian language and walked together toward Tobias Asserlaan, the location of the Indonesian embassy.

As we arrived, there was already a crowd gathered in front of the building. Most of them were Indonesian students studying in the Netherlands.

We were ushered gently toward a line where the embassy staff checked our passports and our fingers; any stains on our little fingers would have been a sign of voting a day earlier and would have disqualified us from voting a second time.

As is the norm when Indonesians meet in the same place, there was a lot of introductions and small chat. I was introduced to some embassy staff and met some old friends and made some new friends as well. It was an event that strengthened the solidarity of Indonesians abroad.

We queued to take our number and waited less than five minutes, as there were not too many people in the room, to get our election card and vote for the next president of Indonesia. Although the quick count from survey institutes already showed that one pair of candidates were leading the pack, it didn't diminish our sense of responsibility and excitement.

The time slot for Indonesians abroad to vote was the last hour of the election. In the case of the Netherlands, it was between 7-8 p.m. as many still had to go to school or work. Not long after my little finger was dipped in blue ink, the counting started. We took pictures with our stained little fingers as a memento.

The last minute decision by the Constitutional Court certainly broadened participation. There were many people like me that were registered in their respective hometowns in Indonesia, but could not get back to vote for many reasons; and were able to vote at the nearest embassy abroad. We just needed to show our passport and if the voting card was still available in the last hour of the election then we could vote.

This process was so logical that it should have always been part of voting policy. Why bother with the voter registration in the first place. The US is firm with registration requirements and they achieved around 60 percent of voting participation. Many countries make enrollment automatic unless stated otherwise. There is also the option of voting by letter that while might diminishing secrecy, is very convenient for people with scheduled activities on voting day.

One could argue that voting with ID cards or passports only would enable fraud and multiple voting. While there could be some way to dilute the ink on the little finger for Indonesian abroad, it would have been very costly to travel to another country just to vote twice.

The requirement to vote in the last hour of voting day is a practical arrangement to prevent that. It would have been easier to vote more than once in Indonesia, but if people are assigned to the nearest voting booth of their official address and the ink is made to be thicker and harder to wash off, then most troubles are avoided.

As I had just finished attending the meeting that agreed to establish the International Association of Indonesian Scientists (I4), where the high mobility of scientists and ties with Indonesian scientists in Indonesia is critical, it was very welcoming to know that no matter where we are, Indonesians are not deprived of their right to vote.

The writer is a PhD candidate in economics at the University of Siena-Italy.

A better deal for those in public office

Jakarta Post (original link)


Berly Martawardaya , Jakarta | Mon, 06/08/2009 9:56 AM | Opinion

Finally Indonesia is seeing an open debate on businessmen and family business in politics.

During the New Order period, the public turned a blind eye to public officials and their family businesses, since business was considered an acceptable means to compensate their low official salaries. Favoritism was sometimes so blatant that in one case the IMF had to include a special clause in its letter of intent, to revoke Tommy Soeharto’s license to produce cars.

Since the beginning of the Reformasi era, such practices have adopted a lower profile, but have not been outlawed and are still socially accepted. Law No. 28/1999 on good governance only broadly forbids any action that puts family or crony interests ahead of the interests of the state or society.

Incumbent President Susilo Bambang Yudhoyono has stated that Indonesia needs leadership that does not mix national interests with family business, and he picked Boediono as his running mate to emphasize this point. On a separate occasion Boediono said ideally public officials should have no business activity whatsoever.

The SBY-Boediono pair is clearly attempting to tap into the public uneasiness with Jusuf Kalla’s and Aburizal Bakrie’s businesses. Both Kalla and Bakrie are members of the Golkar Party. In 2007, Aburizal Bakrie ranked as the richest man in Indonesia according to a Forbes survey, with Kalla at number 33.

Kalla demanded proof to justify comments that his family business had got special treatment, and said it would be discriminatory to forbid public officials and their families from having businesses.

Megawati joined the fray and expressed support for family business regulation, but without banning them.

This seems to be a dilemma. On the one hand it is the legal right of every citizen to be involved in legal business activity. And on the other, the elusive quest for good governance is a very important policy objective – especially in a developing and consolidating democracy like Indonesia. Money cannot buy health and happiness, but it can get a lot of things. Political campaigns can be very costly and thick bank accounts can give parties a much-needed edge to win seats.

In the past, business tycoons were satisfied supporting political candidates that shared their policy views. But the world has recently seen some very rich businessmen climbing into political offices and affecting public policy on their own.

Unsurprisingly, such media tycoons have done quite well in politics since the media plays a pivotal role in political campaigns. Italy’s Silvio Berlusconi got elected three times as prime minister in Italy, while it took a military coup to oust Thaksin Shinawatra in Thailand. They both are the richest men in their respective countries and both own major TV stations.

Ross Perot, a rich oil businessman, almost defeated Clinton and became the president of the United States. Meanwhile, multi-millionaire Michael Bloomberg, the incumbent mayor of New York and owner of a massive media enterprise, is thought to be safely on his way to being reelected for the third time. Ministers of finance in the US have often come from Wall Street’s major investment firms.

Most countries allow people to run campaigns using their own money, but after becoming public officials there needs to be a separation between personal and public interests.

While it is very hard to separate a businessman from his business past – as difficult, perhaps, as it would be to separate a famous movie star-turned-politician from their glamorous past – there is a way to ensure public interests are not compromised once they are elected into office.

Whatever share or stake in a company a public office-holder has, this should be sold and the money should be put either into a fixed deposit or into the custody of a blind trust institution whose function is to manage funds but that is legally forbidden to disclose where the money is invested.

This would avoid conflicts of interest between politicians and any policies that may arise while they are in office. After the person steps down, the control over the resource would be returned to its rightful owners.

Thailand, the Philippines and South Africa, for example, even take one step further and choose to err on the precautionary side with constitutional clauses especially for politicians, their family businesses and their wealth.

In too many cases, countries’ resources and opportunities have been squandered by families of the political elite in their forays into business. While transparency and anti-corruption have had a boost in Indonesia lately, it is too early to let our guard down and be complacent.

If a businessman decides to serve the people and hold public office, a mandatory, but temporary, divestment of his wealth should be a small price to pay for such a noble pursuit.

The writer is a lecturer at the School of Economics, University of Indonesia and a PhD candidate in economics at the University of Siena-Italy.

Tantangan IMF, Berubah atau Punah

Kompas (original link)

Kamis, 7 Mei 2009 | 02:57 WIB

Oleh Berly Martawardaya

Pada September 2007, Managing Director IMF Dominique Strauss-Kahn menyatakan, IMF mengalami krisis identitas.

Para klien utama IMF, yaitu Argentina, Brasil, Indonesia, dan Turki telah melunasi utangnya. Pinjaman IMF ke negara berkembang yang merupakan sumber pendapatan utama lembaga turun drastis 91 persen sehingga perlu dilakukan penghematan biaya operasi 100 juta dollar AS. Pasar modal global lebih dilirik negara berkembang karena bebas dari berbagai persyaratan berat IMF.

Krisis finansial global pada akhir 2008 mengembalikan relevansi IMF seiring dengan mengeringnya sumber modal swasta. Pertemuan G-20 di London menaikkan dana IMF tiga kali menjadi 750 miliar dollar AS dengan 6 miliar dollar AS dialokasikan untuk negara miskin.

IMF juga diberi mandat untuk memberikan early warning terhadap risiko krisis finansial dan makroekonomi, juga mengeluarkan rekomendasi kebijakan untuk menghindarinya.

Pertemuan pimpinan IMF, Bank Dunia, dan para menteri keuangan yang berlangsung 24-26 April lalu adalah kesempatan untuk melakukan introspeksi dan redefinisi peran.

Berubah dan belajar

Salah satu indikator utama berubahnya IMF adalah apakah terjadi revisi kebijakan. Ketika Mahathir Mohamad menerapkan kebijakan capital control di Malaysia, sejumlah kecaman dan prediksi negatif diluncurkan IMF. Capital control berperan besar menjaga stabilitas dan pertumbuhan ekonomi Malaysia.

Menghadapi krisis finansial di Eslandia pada September 2008, salah satu komponen inti program stabilisasi rancangan IMF adalah capital control.

Resep standar IMF adalah Structural Adjustment Programs (SAP) yang menaikkan suku bunga, menurunkan inflasi, dan menekan defisit demi menarik dana internasional. Suku bunga di Indonesia tahun 1998 sempat melebihi 50 persen yang melemahkan sistem perbankan tanpa capital inflow yang signifikan.

Pengurangan defisit acap kali dilakukan dengan memotong anggaran pendidikan, kesehatan, dan berbagai subsidi pertanian. Tak heran pergolakan sosial dan kejatuhan pemerintah kerap mengikuti penerapan program IMF.

Stiglitz, peraih Nobel Ekonomi dan mantan Chief Economist Bank Dunia, menyatakan dalam Globalization and Its Discontent bahwa IMF lebih mengutamakan selamatnya pinjaman swasta daripada kondisi rakyat miskin.

Kebijakan negara maju pada masa krisis adalah kebalikan dari program SAP. Suku bunga diturunkan, bahkan sampai mendekati nol, dan stimulus ekonomi menyebabkan defisit melonjak drastis. Tidak ada negara maju yang memotong subsidi kesehatan, pendidikan, dan jaminan sosial mereka.

IMF telah mengeluarkan program baru bernama Flexible Credit Line (FCL), pinjaman dan bantuan likuiditas tanpa persyaratan ala SAP. Bahkan, pinjaman itu boleh tidak dicairkan sehingga kredibilitas dan kepercayaan internasional bisa diperoleh dengan biaya minimal. Meksiko adalah peminjam pertama FCL sebesar 47 miliar dollar AS.

Ingin menjadi fosil?

Masalah besar IMF adalah tidak berimbangnya hak suara anggota. Pembagian dilakukan berdasarkan proporsi kekuatan ekonomi pasca-Perang Dunia II. Brasil dengan total GDP sekarang empat kali lipat Belgia justru memiliki hak suara lebih kecil. China memiliki hak suara yang sama dengan Kanada, padahal ekonominya enam kali lebih besar.

Total suara negara G-7 ditambah Belgia, Belanda, dan Swiss melebihi 60 persen sehingga tidak akan ada keputusan yang merugikan negara maju. Tak heran negara berkembang enggan percaya dan memperkuat IMF.

IMF juga belum sepenuhnya tobat. Pinjaman yang baru diberikan IMF ke Latvia dan Ukraina masih mensyaratkan pemangkasan defisit gaya paradigma lama. Pada sisi lain, IMF tidak memberikan sanksi apa pun terhadap Amerika Serikat yang menjadi penyebab krisis global dan defisitnya menembus 10 persen GDP.

Perlu tameng

Negara berkembang tetap memerlukan tameng menghadapi krisis dan spekulan. Idealnya ada global lender of last resort yang bisa memberi likuiditas cepat dengan prinsip tanpa batas (freely), sementara (temporary), dan berbiaya premium (with penalty).

Ketiadaan lembaga itu mendorong ASEAN beserta Jepang, Korea Selatan, dan China (ASEAN+3) membentuk Chiang Mai Inisiatif (CMI) dengan total dana 120 miliar dollar AS. Perjanjian bilateral swap agreement telah ditandatangani negara ASEAN+3 untuk memperkuat ketahanan ekonomi.

Asia telah memiliki solusi tersendiri terhadap permasalahan bersama, tinggal masalah waktu sampai wilayah lain menyusul. IMF perlu berubah secara mendasar atau bersiap menjadi fosil sejarah.

Dosen FE-UI; Aktivis NU Profesional Circle

The fall of old wisdoms and the rise of ‘Chindonesia’

The Jakarta Post (original link)

Berly Martawardaya , JAKARTA | Sun, 04/26/2009 11:48 AM | Opinion

Truth may be the first casualty of war, but truth can also emerge after a crisis. And in this context, let us talk about “Chindonesia”, a shorthand for China, India and Indonesia, because these three Asian countries could become the backbone of Asia’s economic revival.

Companies have relocated to Chindonesia for obvious reasons; not because we produce high-tech products with sophisticated methods but mainly because we do things cheaper.

The banking and financial sectors are less developed in Chindonesia. There is not too much financial engineering and sophisticated instruments. India and China also still maintain a degree of capital control that shields them from financial volatility. All three countries have based their economies on the real sector. Agriculture and mining in Indonesia, manufacturing goods in China and IT services in India are the backbones of these economies.

Let us use the downturn of foreign companies to build our own industrial capacity and human capital while cutting the red tape. Chindonesia could not have achieved what it has today without the significant expansion of education, R&D and entrepreneurship. Thus we could emerge from the crisis stronger and more prepared than ever.

The global financial crisis has brought down not only old economic institutions but also the old economic mindset. What used to be conventional wisdoms in economic growth have been exposed to have only weak foundations and be ill- suited to explain current circumstances.

The global economy will have negative growth and contract by one half to 1 percent in 2009, before staging a modest recovery in 2010. OECD countries will suffer significantly with minus 2-3 percent growth, Japan being the hardest hit.

But three major economies have escaped this predicament and are predicting positive growth. While 9 percent growth has been the norm for China over the past decade, achieving 6.5-7 percent in 2009 will not be that bad. India also shines with 4-5 percent projected growth.

Overall, developing economic growth projections without China and India is near zero percent. The third is Indonesia, predicting around 3.5 percent expansion in 2009.

On the other hand, our neighbors in the Association of Southeast Asian Nations (ASEAN) are not doing so well. Malaysia, Singapore and Thailand are all predicting negative growth in 2009. The Ministry of Trade and Industry (MTI) of Singapore has revealed that Singapore’s economy contracted by 19.7 percent for the January to March period.

Malaysian exports have declined for five months in a row, but the decline in February 2009 (-15.9 percent) has narrowed from -27.8 percent in January 2009. For Thailand, let’s just say that they are doing better than we did after financial crisis last decade. The mix between political and economic crises has proven to be very a combustible potion and not conducive to growth.

What lessons can we draw from this?

First, the crisis has exposed the vulnerability export-based economies. The virtue of export promotion as a development strategy has been extolled over import substitution. Carving out a market niche in the global market was seen as the surefire recipe to prosperity. But the sword cuts both ways.

As the global demand subsided, the down swing was particularly felt by countries with a high degree of exposure and income from exports. Thailand suffered an extra mile with the loss of tourists, once a major source of income, as they were scared off by political confrontations.

Second, the low side of high-tech exports. Not all exports are equal. The high-tech sector, with a high degree of value added, used to be where countries were aiming to be. Cars, cell phones, computers and microchip technology with other electronic products are the 4Cs said to bring in foreign currency.

But the high-tech products are also the first consumers cut down on in an economic downturn. It may be a less merry and glitzy life, but they realize that that they could live without these things.

Japan, the world’s second-largest economy, posted their sharpest-ever decline in February – down by 49.4 percent – as global demand for Japanese cars and electronics evaporated.

Lastly, finance is no longer king. New York, London, Singapore and Hong Kong used to be the center of the robust financial world. Exotic financial instruments have brought untold wealth to industry leaders.

While there has been no systematic effort to reduce exports, the exports in all three countries’ economies range around one third of the GDP, leaving domestic consumption, investment and government expenditure strong enough to cushion the shock of the crisis and provide a decent rate of growth. Large populations are a plus in this case.

In 2006 PricewaterhouseCoopers (PWC) coined the term the “Emerging Seven” (E-7), namely China, India, Brazil, Russia, Indonesia, Mexico and Turkey – that its says will replace the G-7 (the United States, Japan, Germany, UK, France, Italy and Canada) as the global economic powerhouse and will be around 50 percent larger than the G-7 by 2050.

Looking at how things turning out, this may be a realistic projection.

The writer is a lecturer at FEUI and PhD candidate in Economics at the University of Siena-Italy
and a member of the NU Professional Circle.

A district-based system: More efficient, accountable

The Jakarta Post (original link)

Berly Martawardaya , JAKARTA | Wed, 04/15/2009 10:20 AM | Opinion

The legislative elections passed relatively peacefully, so now what?

We could all sit down and argue hypothetically about the exquisite courting dance between political parties forming coalitions for the upcoming presidential race.

But ultimately, the reality will be more heart wrenching than Dancing with the Stars or Indonesian Idol.

We should definitely investigate irregularities in registrations and election conduct, impose stiff penalties for offenders, and reschedule elections where necessary.

We need election results to be legitimate and final. Don’t let Indonesia’s political system inch any closer toward Thailand, where the legitimacy of the election system is undermined and those elected face massive street protests.

Or we could ponder the major problems in our current system, and start preparing solutions. Arguably, political parties and election candidates were not well prepared when the Constitutional Court (MK) announced its decision to make the legislative elections candidate-centered instead of party-centered.

Campaign advertising was not geared toward coherent and compelling personal stories of candidates, but remained heavy with party symbols and figures and messages.

Even when candidates learn to do it right under the prevailing system, and assuming the elected legislature and incoming government do not mess with the Constitutional Court ruling, it will still be very costly to get elected as a legislator, either at national or regional level.

Lee Kuan Yew, the longtime successful prime minister of Singapore who still holds sway in government, came out with a simple and powerful law in his memoirs. The higher the cost of being elected to public office, the less clean the government will be.

We can talk all we want about having competent and genuine candidates, but even the competent and pure of heart need money to win.

The current system is very costly and forces candidates to spend massively.

The conundrum is whether to borrow and hope to recoup after winning, or to solicit campaign
contributions from wealthy donors and remain beholden to their interests.

We need to decrease the size of electorates (dapil) so candidates can focus their campaigns more effectively and provide more bangs for their bucks.

The current system, a multiple seat constituency, needs to change to single seat constituency – a district system.

Now is a rare moment where political parties’ needs coincide with public interest. Election candidates want to reduce their campaign costs and the public wants more accountability.

In district system, a political party only fields one candidate in each district, thus escaping bloody and costly feuds where candidates from the same party fight each other for votes.

The accountability side will also be well served. With only one legislator, the electorate knows who they can hold responsible for policies in parliament and whether to punish or re-elect candidates accordingly.

What about claims that a district system would weaken parties?

Maybe this question should be reframed to “what kind of election system is best for Indonesia?” We adopted the proportional system from the Dutch.

In such a small country, it is safe to assume that regional differences do not really matter, thus whoever becomes a member of parliament within one party has little consequence.

But Indonesia is much larger than the Netherlands, with real regional differences. Our diversity should be a strength instead of being glossed-over and ignored.

Having a Jakarta native with a fancy degree masquerading as a local to get a seat in the national legislature will just not do anymore.

This approach has already done too much damage. Indonesia needs more local people with local wisdom and real knowledge of local problems in the national scene.

Having a system of party primaries could enforce party discipline. No longer could someone be assigned to be candidate in one area just because of proximity – or worse, financial contributions to the party chairman.

That person must prove their mettle in an intra-party election. Thus representing the view of local party members in the corresponding district. Whoever emerges as the winner could then run as the party candidate.

If a party thinks, through surveys or other means, that it is not competitive in one area, it could opt to not run a candidate but support another party’s candidate in that area. A political pact should be made before the election and become the foundation of a permanent alliance in governing.

Thus the people would have a better idea of what is to be expected if the party or alliances of parties go on to win the election.

Indonesia’s complex tapestry of geography, ethnicity, religions and history is likely to have room for more than two national parties.

Malaysia and India have relatively permanent coalitions of parties representing different society groups, either governing or waiting in the wing as loyal oppositions.

There are also some studies that point out that having a combination of direct presidential elections and district legislative elections is the most stable system because party discipline in weaker and possible to form temporary issue and geographical alliances.

A district system would reduce campaign costs, increase accountability and produce a more stable government. What are we waiting for?

The writer is a lecturer at School of Economics, University of Indonesia

G20 summit: A global new deal?

The Jakarta Post (original link)



Berly Martawardaya , JAKARTA | Wed, 04/08/2009 11:07 AM | Opinion

UK Prime Minister, Gordon Brown, called the G20 Summit in London a Global New Deal and solution to the current financial crisis. The twenty participant countries make up 85 percent of global gross national product, 80 percent of world trade and two-thirds of the world population.

The G20 Summit needs to be complemented and praised for the role it has played. It used to be the order of the day that the mainly white rich nations’ club of the G8 decided what was good for the world.

The G20 was inaugurated in 1999 and has had annual meetings since then, but only since the financial crisis unfolded in 2008 has it became a major forum to find global solutions. Enlarging the committee to save the world has increased the sense of global ownership, so we can take together the hard steps that need to be taken.

It is no longer the task of the developing countries to implement the pre-cooked solution prepared by smarter and richer countries. Now we are in it from the start, hammering out solutions together.

The other break with the past is in the character of solutions offered. No country was foolhardy enough to propose raising interest rates, cutting spending or eliminating subsidies for the poor as often previously required by the IMF and imposed on countries in crisis through IMF structural adjustment programs (SAPs).

Instead the summit offered a refreshing break from the previous Washington Consensus with its market fundamentalism. The communiqué of the meeting is filled with references to ease monetary policies and promote fiscal stimulus. The world is truly Keynesian now.
But to be judged successful, the summit needs to have accomplished three things.

First, to do no harm. The Hippocratic principle was executed seamlessly. It’s not as easy as it sounds; there were many contentious issues between US and Europe as well as between West and the Rest. Playing them down also has consequences.

Credible assurances of commitment to free trade and against protectionism were badly needed. Stock markets in Europe rose by one percent on average, while in Asia we had 4-5 percent increases in the Nikkei and Hang Seng indexes.

Second, it needed to agree on policies to minimize the economic downturn, accelerate recovery and support long-term growth. Obama called for fiscal stimulus of at least two percent of each country’s GDP. While Angela Merkel was exceedingly worried about Germany’s history of hyperinflation, inclining her not to accept this proposal, the final language stated that collectively G20 countries agreed to spend US$1.1 trillion dollars to boost the world economy.

The basic principles of Keynesian economics are very simple. Put money in the hands of people that are more likely to spend it the soonest. The more luxurious the goods and services purchased, usually, the lower the impact for the whole economy. The increase in demand will utilize the idle capacity, end the waiting game and get the economy moving again. That’s why the commonly recommended policies are tax-cuts, subsidies and direct cash transfers to the poor. Government have to run deficits as they are the only economic agents taking a long term view and having credibility.

In the global context, stimulus means putting money in the hands of low-income countries. The G20 agreed to spend $100 billion to assist international development banks in lending to poor countries. Additional resources of $6 billion from agreed IMF gold sales will also be made available for lending especially for the poorest countries.

Among the loans that banks freeze in the name of caution after a crisis unfolds are trade credits. Producers from developing countries commonly use trade credit facilities and Letter of Credit (L/Cs) from developed country banks due to lack of domestic financing. With the negative impact of the credit crunch, developing countries then cannot export their products anymore, due to lack of trade finance.

The G20 committed $250billion of support for trade finance over the next two years through export credit and investment agencies, as well as through multilateral development banks. This is a very welcome relief that gets right to the root of the problem.

Third, the summit also needed to strengthen institutional arrangements to prevent that a similar crisis should occur again.

While stopping short of erecting a wall between the consulting, auditing and banking industries on similar lines to those before the repeal of the 1933 Glass-Steagall act in 1999, the summit made very clear pronouncements in the direction of transparency. The shadowy banking world of the hedge fund is about to come into the light of day and to be regulated, while list of countries that protect tax havens will also be announced shortly.

International accounting standards will be set and credit rating agencies will be regulated in order to remove conflicts of interest. A newly established Financial Stability Board (FSB) will supervise and provide early warning systems to enable steps to be taken before a problem grows into a full-scale crisis.

But the IMF still presents a dilemma. Countries need to have sufficient capital to fend off speculative attacks, but association with the IMF was even more politically toxic than exposure to sub-prime mortgage losses for past victims of the 1998 Asian banking crisis. Furthermore, the current composition of voting weight within the IMF is still over-representing the G8 countries.

Thus, the costlier but preferred path is to pool reserves and set up regional agreements to help each other through such unfortunate events. The G8 countries seem oblivious that simply increasing IMF capital will do little to ease these concerns.

The leaders of the G20 put on a great show, let see if they can walk the talk.


The writer is a lecturer at FEUI and PhD candidate in Economics at the University of Siena-Italy and a member of the NU Professional Circle.